Remittances are potential drivers of economic growth and development

Moving money around the world these days is almost second nature to the Internet generation when once, only a mere decade or two ago, it was a rare event indeed. But the truth is now we barely think about it as we click pay buttons to complete online purchases, or use international money transfers to send wages back home to the family or to help out errant back-packing sons and daughters who find themselves in the middle of nowhere bereft of funds. Life has certainly changed in such a short space of time.

However, such payment or money transfer services can come at a fairly exorbitant price, through the charges levied, sometimes on both sides of an international transaction. But that's fine if you think it's a price worth paying. And perhaps it is, especially if it's a one-off emergency-type situation, such as helping out a son or a daughter in some financial difficulty.

The Middle East and North Africa (MENA) region is renowned for its use of millions of migrant workers every year, the vast majority of whom tend to find employment in the construction, contracting and maintenance sectors. The small Persian Gulf state of Bahrain, for example, has a population of around 1.3 million people. But more than half its population is made up of migrant workers, with the largest grouping from the Indian subcontinent. Naturally, some of Bahrain expatriates most regularly transfer some or all of their wages back home. Such remittances, as they're usually called, add up to huge amounts of money. A 2011 World Bank estimate put annual remittance totals across the globe at more than $400 billion.

Across Africa, remittances represent a rising source of finance and hold immense potential as drivers of economic growth and development. A recent study, Leveraging Migration for Africa: Remittances, Skills, and Investments, conducted by the African Development Bank (AfDB) in collaboration with the World Bank, shows that remittance flows into Africa reached $40 billion in 2010 and have quadrupled since 1990. African remittances currently account for 2.6% of GDP, a figure that in some countries equals or even exceeds both foreign direct investment and aid.

This coming June sees the Africa Remittances and Money Transfer Forum meeting at the Palace of the National Assembly, in Praia, Cape Verde, an island country some 350 miles off the African coast. The forum aims at developing new strategies and policies to use remittances as drivers for economic growth and poverty reduction.

The event, says AfDB, will offer a unique platform for money transfer operators to meet regulators and for action plans for lowering remittance costs, simplifying and harmonizing legislation, increasing market competition, and minimizing risk.

AfDB says, “Finance ministers, central bank governors, banks, money transfer operators, mobile technology and telecoms companies, legal advisors, development finance institutions, multilateral organizations and regional economic communities will have the opportunity to find shared solutions and forge new partnerships. "The forum will explore the economic implications and potential of remittances in Africa, as well as discuss ways to bring informal remittance flows into the formal financial system. Participants will learn about the latest mobile technologies and financial services."

The bank added that Africa's remittances were controlled by a few international money transfer operators. However, a large proportion of African migrants still preferred informal transfer mechanisms. The full story can be found here.